Facebook could make billions from something it’s not even doing yet

Facebook is slowly but surely taking over the Internet. In a post after its Q2 earnings call on Wednesday, CEO Mark Zuckerberg wrote that “1.49 billion people are now part of our community. In 1876, the year the first telephone call was made, around 1.49 billion people were alive.”

Those 1.49 billion people use Facebook FB to plan events, talk to each other, share pictures, and keep up with the latest news. But there’s something else we’re using it for that we barely even notice: search. People now make 1.5 billion search queries on Facebook per day, according to opening remarks during Facebook’s earnings call.

At the moment, most of those searches are for people or posts. But analysts at Bank of America Merrill Lynch have suggested in a note that Facebook could move to include the kind of commercial searches that made Google $15.5 billion in ad revenue in Q1 2015. Those analysts pin the value of Facebook’s opportunity in commercial search at $5 billion, greater than the bank’s estimate for Instagram’s future value.

Still, Facebook views search differently than Google GOOG. Instead of focusing on commercially relevant content, Facebook plans to use search as a way to keep people on the social network for longer stretches of time. More time spent on the site means more ad revenue, after all.

Mark Zuckerberg and Priscilla Chan are expecting a baby girl

Facebook CEO Mark Zuckerberg and his wife Priscilla Chan are expecting a baby girl, the couple announced — where else — on Facebook Friday.

“This will be a new chapter in our lives. We’ve already been so fortunate for the opportunity to touch people’s lives around the world — Cilla as a doctor and educator, and me through this community and philanthropy. Now we’ll focus on making the world a better place for our child and the next generation,” Zuckerberg wrote.

Zuckerberg’s post also revealed that Chan, a medical school graduate, has had three miscarriages over the couple’s two-year quest to have a child.

“You feel so hopeful when you learn you’re going to have a child,” Zuckerberg wrote. “You start imagining who they’ll become and dreaming of hopes for their future. You start making plans, and then they’re gone. It’s a lonely experience. Most people don’t discuss miscarriages because you worry your problems will distance you or reflect upon you — as if you’re defective or did something to cause this. So you struggle on your own.”

But Zuckerberg said that Chan is “now far enough along that the risk of loss is very low and we are very hopeful.”

“Cilla and our child are both healthy, I’m extremely excited to meet her and our dog Beast has no idea what’s coming,” said Zuckerberg. “In our ultrasound, she even gave me a thumbs up ‘like’ with her hand, so I’m already convinced she takes after me.”

This is what Facebook’s solar-powered Internet plane looks like

Mark Zuckerberg announced that Facebook’s solar-powered Internet plane Aquila has taken flight.

In a video posted to his Facebook page, Zuckerberg introduced the 140-foot wingspan aircraft that is designed to provide Internet access to remote regions.

To see the story about the plane’s design, here’s the link to the video and Zuckerberg’s Facebook post. It already has over 20,000 likes.

“Aquila is a solar powered unmanned plane that beams down internet connectivity from the sky,” he wrote. “It has the wingspan of a Boeing 737, but weighs less than a car and can stay in the air for months at a time.

“This effort is important because 10% of the world’s population lives in areas without existing internet infrastructure. To affordably connect everyone, we need to build completely new technologies.”

Per Re/Code:

The plane isn’t just an idea or a mockup. An actual version of the plane was built in the United Kingdom and Facebook plans to test it, probably somewhere in the United States, later this year, according to Facebook’s VP of Engineering Jay Parikh.

Here’s the picture Mark Zuckerberg used to show Facebook’s monster success

Facebook reported its 2015 second quarter earnings on Wednesday, and it seems like, for Mark Zuckerberg, there’s nowhere to go but up. Facebook FB reported a 39% increase in revenue in the quarter, largely due to mobile advertising sales. (And factoring out the influence of the strong dollar, revenue would have grown 50%.) With Facebook’s increasing relevance in the mobile advertising space, it will come second only to Google in 2015 for capturing the global mobile advertising market. For the first time, the company reported quarterly revenue in excess of $4 billion as it emerges as a top mobile advertising market rivaling Google.

Investors weren’t all smiles, though. Facebook expenses rose 82%, shaving profit margins down to 31%. So even though Facebook beat Wall Street earning estimates, its stocks fell after hours. Zuckerberg had previously warned shareholders that 2015 would be a big year for investment in hiring and long-term projects, like artificial intelligence, virtual reality, and expanding global internet access.

Zuckerberg seemed to be most excited about Facebook’s continued expansion. He lead the earnings call on Wednesday with the global growth of the social media platform’s users. Daily active users grew 17% year-over-year to 968 million people, and mobile daily active users grew 29% to 844 million people worldwide. After the call, Zuckerberg posted a victory lap on Facebook tallying the company’s ever-widening influence:

Mark Zuckerberg / Facebook

We just announced our quarterly earnings and gave an update on our community’s progress.

1.49 billion people are now part of our community.

In 1876, the year the first telephone call was made, around 1.49 billion people were alive.

With each generation, the world is growing closer together. One day our community will connect everyone. Thank you for being a part of our mission and our community.

Wall Street wants to know if Instagram can make money

You know a company is doing just fine when the first analyst question in an earnings call amounts to, “Why aren’t you spending more money?” (Facebook CFO Dave Wehner kindly explained that he’s spending money as fast as he can thankyouverymuch, and will continue to do so through 2015, which is “an investment year” for the company.)

That matched the tone for Facebook’s second quarter, which was just fine — not blockbuster by Facebook standards, and not bad either. The company earned $4.2 billion in revenue last quarter, a 39% increase over the year prior. It turned a healthy profit of $719 million, or $0.25 per share. Even so, investors traded the stock down more than 3% in after hours trading.

Facebook FB has been popular with investors over the last two years, even as CEO Mark Zuckerberg does the sort of thing investors tend to hate: dropping mind-boggling sums of cash on virtual reality and messaging startups, and spending his time on the humanitarian-tinged project, Internet.org. Yet Facebook’s stock has been pretty much invincible, thanks to healthy profit margins and steady growth in users, engagement, and revenue.

Part of that is because investors’ biggest complaints about Facebook – that it was late to mobile and that it’s no longer cool with teenagers – now have simple answers. The company makes an astounding 76% of its revenue from mobile today, and Instagram, with 300 million users, is in no danger of losing its cool.

No, now analysts are now obsessed over whether Instagram can profit from that coolness. Facebook has been running ads on Instagram since last year, but has yet to deliver any figures such as how much ad revenue Instagram earns. Since Instagram was Facebook’s first big acquisition of a standalone product, it sets the tone for the way its subsequent deals for Oculus VR and WhatsApp might eventually monetize.

On the earnings call, analysts asked how broadly Instagram will open to advertisers and whether those ads target different consumers. They asked whether Instagram users are more willing or less willing than Facebook users to interact with ads. They asked whether Instagram can ever be a “realtime snapshot of the world.”

They didn’t get much of an answer. Instagram remains small relative to Facebook, Sandberg said. “It’s going to really take time to have significant impact on our growth,” she added.

That hasn’t stopped others from speculating on Instagram’s revenue. Emarketer predicts Instagram will bring in $595 million in ad revenue this year, which is no drop in the bucket relative to Facebook’s $12.4 billion last year. A Wall Street analyst said in December that Instagram is worth $35 billion.

Facebook’s answer to analysts eager to see revenue from its big acquisitions has not changed from quarter to quarter. It is, essentially, look at how we monetized News Feed ten years ago. That’s what we’re doing here, too. In other words, don’t hold your breath.

For now, the best official word we’ll get from Zuckerberg is a sloppy wet kiss to Instagram co-founder Kevin Systrom. “Kevin and the team are doing amazing work,” he said. “The clarity of focus and clarity of the vision … has been exceptional.”

Fed meeting, Greek talks, and Facebook — 5 things to know this week

The markets this week will be waiting and watching as leaders from the Federal Reserve meet for the last time before September, when a rate hike could finally become a reality. Tech stocks are coming off a volatile week, but Facebook will look to make a positive mark on the market when it releases quarterly earnings. Meanwhile, the government will offer a glimpse of the U.S. economy’s second-quarter growth and Greece will meet with its euro zone creditors in an effort to move toward finalizing the country’s third bailout.

On Wednesday, the Federal Market Open Committee kicks off its latest two-day meeting to set monetary policy. The conference marks the Fed’s final meeting before September, which is when economic analysts predict the central bank will finally implement its highly-anticipated interest rate hike.

2. Facebook’s big event

The social networking giant reports its second-quarter financial results on Wednesday. Facebook FB is expected to show an uptick in revenue, though that growth could be squeezed a bit by the strong U.S. dollar. Investors will be interested to see what kind of user growth Facebook managed while it’s also possible that CEO Mark Zuckerberg could reveal more information about the company’s plans to increase its number of media partners. But Facebook won’t be the only major tech company potentially moving the market this week, as both Twitter TWTR and LinkedIn LNKD also report earnings this week.

3. Greek bailout talks continue

Talks between Greek officials and the country’s euro zone creditors continue this week. Leaders from the European Commission, European Central Bank, and International Monetary Fund are in Athens to negotiate the approval of the 86 billion euro bailout plan that would represent Greece’s third bailout to date. Greek Parliament voted overwhelmingly last week to adopt an additional set of austerity measures that are key to securing the bailout and leaders on both sides are keen to reach an agreement before the August 20 deadline for Greece’s 3.4 billion euro payment to the ECB.

4. Second-quarter GDP

The U.S. Commerce Department offers a look at the country’s economic growth in the second quarter when it releases gross domestic product data for the April-June period, on Thursday. GDP is expected to have increased at a 2.6% annual rate in the second quarter — thanks to stronger consumer spending — after contracting at a rate of 0.2% during the year’s first three-month period.

5. More earnings to watch

Two of the world’s largest oil companies, Exxon Mobil XOM and Chevron CVX, report second-quarter earnings on Friday and both firms are expected to post further declining profits due to low global oil prices. Personal care products giants Procter & Gamble PG and Colgate-Palmolive CL are reporting quarterly results on Thursday and investors in both companies will be interested to hear about efforts to reduce the impact of the strong U.S. dollar on foreign revenue streams. Meanwhile, Anthem ANTM will release its second-quarter results on Wednesday, less than a week after the company announced its $54 billion purchase of smaller rival Cigna CI — a deal that would create the largest U.S. health insurer by membership.

Facebook’s stock just stole this record from Google

Facebook’s market value closed above the $250 billion-mark on Monday for the first time since the social networking giant went public in May 2012.

Facebook FB, which saw its shares climb by 2.4% to $90.10 apiece on Monday, had the shortest trek of any company to a $250 billion market cap at just over three years. According to Bloomberg, the previous record-holder for the fastest rise to $250 billion was Google GOOG, which took roughly eight years to hit the mark. (Google now sports a market value of more than $375 billion.)

For Facebook, the milestone comes less than a month after the company helmed by cofounder Mark Zuckerberg knocked Walmart WMT off the list of the 10 largest companies by market value. The social networking company’s stock is up more than 15% since the start of the year, thanks to the continued rapid growth of its ad sales business and expanding profit margins. Its shares have gained more than 35% over the past 12 months.

Facebook made its market debut with a splash in 2012, closing its first day of trading with a market value of more than $104 billion. But, the company’s shares fell sharply in subsequent months before stabilizing and beginning the eventual climb to $250 billion.

Here’s how Mark Zuckerberg keeps Facebook’s investors in check

Facebook fbCEO Mark Zuckerberg cites Facebook’s dual-class stock structure as one way he retains control over his company. As a result, Zuckerberg retains majority voting power in decision-making despite not having a majority of shares.

Om Malik, who founded Gigaom, posted the question on Facebook: “How much do you think Twitter’s problems are driven by the fact that Wall Street (and other investors) judge a CEO differently from a strong founder? For a while Facebook strategy was questioned by short-term oriented investment community but it was the founder (aka) you who stayed the course.”

Zuckerberg replied to Malik: “The more power you have as a CEO, the easier it is for you to do what you think is right and ignore people pushing for shorter term interests.”

“Similarly, if you have control of the company — like I do at Facebook and an increasing number of founders do — then it is very difficult for investors to fire you,” added Zuckerberg. “This means you don’t need to worry about losing your job over a couple of bad quarters or controversial short term decisions, and that makes it easier for you to make the decisions you think are correct as well.”

He continued: “If you have to make short term tradeoffs because activist investors are pressuring your board for quick financial results and you might get fired otherwise, then the compromises you make will just make it harder and harder to deliver the results you want and execute your mission over time.”

The Q&A comes just after Facebook announced that it was adding an option for marketers to pay after a video runs for at least 10 seconds.

In response to a question from BuzzFeed asking whether Facebook FB would end the policy in light of those concerns, Zuckerberg replied that the real name requirement was essential to Facebook and that the policy’s meaning had been misinterpreted.

“There is some confusion about what our policy actually is,” the CEO wrote during a Facebook Q&A. “Real name does not mean your legal name. Your real name is whatever you go by and what your friends call you. If your friends all call you by a nickname and you want to use that name on Facebook, you should be able to do that.”

The 31-year old executive also emphasized that a real name requirement exists, at least in part, to protect Facebook users. “[The policy] helps keep people safe,” said Zuckerberg. “We know that people are much less likely to try to act abusively towards other members of our community when they’re using their real names. There are plenty of cases — for example, a woman leaving an abusive relationship and trying to avoid her violent ex-husband — where preventing the ex-husband from creating profiles with fake names and harassing her is important. As long as he’s using his real name, she can easily block him.”

This isn’t the first time Facebook has had to answer for the real name policy. Last October, after a number of drag queens were locked out of their accounts for real name violations, the company apologized to LGBTQ users for “for the hardship that we’ve put you through in dealing with your Facebook accounts over the past few weeks,” and promised Facebook would develop a new system to review accounts that are reported as fake.

Zuckerberg echoed that promise in his most recent statement on the issue, saying Facebook is “working on better and more ways for people to show us what their real name is so we can both keep this policy which protects so many people in our community while also serving the transgender community.”

But the policy’s opponents have reason to be skeptical of the CEO’s latest assurance. Since the company first vowed to reform their real name system, a number of users have continued to have their accounts locked for perceived policy violations. Writer Lux Alptraum said she was banned for not using a real name in February, and Facebook gave her no recourse to contest the decision.

“The only option I was offered was to update my name; there was no option to contact a Facebook representative or even submit any documentation to support my online identity,” wrote Alptraum.

Facebook CEO Mark Zuckerberg and his wife Priscilla Chan have announced they’re donating $5 million to a scholarship fund to help undocumented immigrants in the U.S. attend college.

In a Facebook post, Zuckerberg said he made the donation to the fund, called TheDream.US, to allow hundreds of young immigrants the chance to receive a legal education.

“America was founded as a nation of immigrants,” wrote Zuckerberg. “We ought to welcome smart and hardworking young people from every nation, and to help everyone in our society achieve their full potential. If we help more young immigrants climb the ladder to new opportunities, then our country will make greater progress.”

Zuckerberg’s investment will create a scholarship fund to enable over 400 immigrants in the San Francisco Bay Area the opportunity to attend college. “Over the coming years, our hope is to prepare hundreds of students to graduate with associate or bachelor’s degrees so they can build meaningful new careers,” he wrote.

TheDream.US provides up to $25,000 for four-year colleges or up to $12,500 for associate’s degrees. To be eligible for TheDream.US scholarships, Dreamers must have the ability to stay in the U.S. under the Deferred Action for Childhood Arrivals program, called DACA, or Temporary Protected Status.

Zuckerberg became directly involved in immigration reform in 2013 when he co-founded FWD.US, an organization that boasts it is “mobilizing the tech community in support of policies that keep the American Dream achievable in the 21st century, starting with comprehensive immigration reform.”